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The New Zealand dollar is attempting to recover higher against the US dollar after sellers failed to breach the June monthly trading low last week. A bullish double-bottom pattern may have formed after sellers failed to breach the 0.6925 support level last week. A technical breakout to the upside is likely this week if NZDUSD bulls can move past the 0.7100 resistance barrier.

The NZDUSD pair is only bullish while trading above the 0.7100 level, key resistance is found at the 0.7200 and 0.7300 levels.

The NZDUSD pair is only bearish while trading below the 0.7100 level, key support is found at the 0.6990 and 0.6925 levels.

The US dollar remains volatile against the Canadian dollar currency as the pair continues to range between the 1.3300 to 1.3400 level. The USDCAD pair could form a bearish double-top pattern this week if bulls are unable to break above the 1.2450 resistance level. The 1.2300 level is an important pivot point to watch this week for a potential reversal or continuation of the bullish trend.

The USDCAD pair is only bullish while trading above the 1.2300 level, key resistance is found at the 1.2380 and the 1.2440 levels.

If the USDCAD pair trades below the 1.2300 level, sellers may test the 1.2250 and 1.2160 levels.

Technical analysis

The RSI is above 50, so the uptrend prevails. Although, the indicator is close to line 70, which may be a sign of a slight downward correction.

What the possible outcomes are

GBPUSD rose from 1.38196 after expectations that the British government will announce proceeding with plans to fully reopen the economy later this month despite a surge in COVID-19 cases. Although, its next direction will depend on the Fed minutes. However, the current technical indicator refers to a possible uptrend potential.

The price may rise towards 1.39296, with the next target at 1.39817.

Alternatively, if the price reverses, then it could reach the first support level of 1.38725. A pass below the first support level can move bears lower toward 1.37750.

Key levels

Support 1.38725 1.38196 1.37750

Resistance 1.39296 1.39817

Crude oil surged to the highest level in three years as investors reacted to the latest OPEC+ meeting. The members abandoned a decision to increase production after a disagreement between Russia, Saudi Arabia, and the United Arab Emirates (UAE). The meeting was due to restart on Monday after disagreements continued during the weekend. As a result, investors believe that there will be a supply shortage if OPEC members continue with this strategy. They also believe that the disagreements risk damaging the relations between Saudi Arabia and the UAE. Brent, the international benchmark, rose to $77 while West Texas Intermediate (WTI) rose to $76.20.

The Japanese yen strengthened against the US dollar after positive household spending data. According to the country’s statistics agency, household spending declined by 2.1% in May after rising by 0.1% in the previous month. This decline was better than the median estimate of -3.7%. Meanwhile, household spending rose by 11.6% year-on-year, better than the median estimate of 10.9%. The overall wage income rose by 1.9% while overtime pay rose by 20.70%. Overtime pay is an important number since it shows how busy companies are.

The Australian dollar held steady ahead of the latest Reserve Bank of Australia (RBA) decision. The bank is expected to leave interest rates unchanged and tweak its asset purchases policy. The decision comes at a time when the Australian economy is making substantial progress during its recovery. Other key events today will be the latest Eurozone retail sales and the German ZEW economic sentiment number. US markets will reopen after the long weekend. Markit and the Institute of Supply Management (ISM) will publish the latest services and non-manufacturing PMI data. Further, traders will focus on cryptocurrencies as the latest ransomware attack continues. Hackers have demanded $70 million for the encryption code.

AUDUSD

The AUDUSD pair rose to a high of 0.7550 ahead of the latest RBA meeting. This price is substantially higher from last week’s low of 0.7443. It has also moved above the descending red trendline and the 25-day and 15-day moving averages. The signal and histogram of the MACD have moved above the neutral line. Also, the pair seems to have formed a double bottom pattern. Therefore, the upward trend may continue as traders expect a hawkish RBA decision.

EURUSD

The EURUSD pair is little changed ahead of the latest Eurozone retail sales and German sentiment data. On the 30-minute chart, the pair has moved slightly above the 25-day moving average while the Relative Strength Index (RSI) and MACD are at the neutral level. The pair also seems to be forming an inverted head and shoulders pattern. Therefore, it will likely break out higher ahead or after the EU retail sales data.

USDJPY

The USDJPY pair declined after the latest Japanese economic data. On the four-hour chart, the pair moved below the 25-day and 15-day exponential moving average (EMA). It has also moved slightly below the center of the ascending channel shown in red. The RSI and MACD lines of the indicator have also continued dropping. Therefore, the pair will likely continue falling as bears target the lower line of the channel at 1110.50.

Market movers today

• Today's key release is the US ISM service index. The ISM service index has been high for a while, partly because transportation has benefited from the manufacturing boom. The index is probably not a good indicator for whether we are going to see a normalisation of the consumption pattern.
• In the euro area, we get retail sales in May. Consensus is looking for an increase supported by the gradual easing of restrictions in May.
• We also get ZEW expectations.

The 60 second overview

ECB comments: ECB Official Schnabel said over the week-end that the inflation could be allowed to temporarily overshoot target while the economy recovers, while Klaas Knot (hawk) warned about rising inflation and the risk that inflation would become entrenched. Yesterday, ECB's De Guindos said that ECB must ensure that the recent rise in inflation must not become permanent.

There is significant focus on the comments from the ECB officials as the markets are awaiting the monetary policy review from ECB that is scheduled to be published later this year. However, short term there has been modest impact on the comments from the week-end and yesterday. ECB de Guindos are again speaking today.

Oil prices and OPEC: The tensions within OPEC+ with no deal on boosting oil production continues to drive oil prices higher with the rift between Saudi Arabia and UAE increasing. Yesterday, the US President Biden urged OPEC+ to make a deal given that higher energy cost will limit the economy recovery. The market impact have so far been limited as the situation despite there is no deal, but the situation is very "fluid" and thus we need to see more tensions within OPEC+ before the rise in oil price would be more persistent.

Equities: Buoyant start to the week but in dampened trading volumes as US markets were closed for holiday. The value vs growth trade continued to zig zag, this time to value's advantage with banks and materials among best sectors. European equities were all higher, with Stoxx 600 up 0.3%. Sentiment continuing this morning with US futures slightly higher with Nasdaq the only exception. Asian markets mixed with Japan outperforming.

FI: There was modest movements in the European government bond yields yesterday despite the rising oil prices on the back of the problems of reaching deal in OPEC+. The recent rise in e.g. 5y5y European inflation expectations from 1.5% during mid-June to currently 1.61% has had modest impact on European yields.

FX: FX markets were quite calm yesterday as US was off, there was no major macro releases and risk sentiment was broadly stable.

Credit: CDS indices were largely stable on Monday. iTraxx Xover tightened around ½bp (closed at 226bp) and Main was unchanged (closed at 45.5bp). Both HY and IG bonds were unchanged at end of day

Nordic macro

Yesterday the speaker of the Riksdag proposed the previous PM Loefvén again to try to form a new government. The Left party has since before said it will lay down its votes and hence opens up for him. But at the same time says it does not take part in budget negotiations and will propose its own budget. The Centre party says it will open up too for the PM based on the realization of a deal with some specific action, but it will too present its own budget. The Greens (which were in coalition with Loefvéns Social Democrats) said it will support Loefvén but push back of the Centre party's deal. Hence, these stances appears to be incompatible form a budget perspective (which will be a problem later on this autumn). For now, however, it seems as if Loefvén will be accepted as PM on Wednesday's vote of confidence as he will not be rejected by a majority in the Riksdag (negative parliamentarism). Loefvén has said he will resign if he does not get support for his budget later this autumn.

Riksbank buys municipality bonds today in three different maturities.

General trend

• Energy shares supported by the rise in oil prices.
• Nikkei 225 has remained modestly higher [Gainers include Topix Air Transportation, Iron & Steel and Banks indices].
• Shanghai Composite declined during the morning session [Consumer Staples index dropped over 3%, CSI Liquor index drops over 2%; IT index rose over 1%].
• Hang Seng and HK TECH indices have continued to decline; Property names trade generally weaker amid Jun sales figures; BYD rises after issuing monthly sales figures.
• S&P ASX 200 traded lower ahead of the RBA decision [Energy index rises over 2%; Resources index also outperforms; Consumer and Financial indices lagged].
• Samsung is expected to issue Q2 guidance on Wed (financial press).
• NZD supported by analysts RBNZ calls.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 0.10%; AS EXPECTED; adjusts weekly bond buying amounts, to review again in November; Maintains bond purchase program at A$100B, program to extend beyond September; Maintains 3-year yield target pegged to April 2024.
• (AU) Australia total weekly payroll jobs change for Jun 6th-20th: +0.3% v -0.9% prior; Wages +0.4% v -1.6% prior.
• RHP.AU To be acquired by Crayon at A$2.50/shr cash.
• ESK.AU Reports prelim H1 Rev $4.2M, +76% y/y (guided $3.5-4.0M); Guides H2 contracted Rev $4.2M.
• WBC.AU Announces sale of Westpac New Zealand Life for NZ$400M to Fidelity Life.
• (NZ) New Zealand Q2 Business Confidence: +10% v -13% prior; Capacity Utilization: 94.9% v 93.3% prior.
• (AU) Australia Jun TD Inflation Gauge M/M: +0.4% v -0.2% prior.
• (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$318.2B v A$313.6B prior (Record high).

Japan

• Nikkei 225 opened +0.3%.
• TOEZ.JP President Yamaji: See a “realistic” opportunity that equity trading hours will be extended (currently 5 hours) – press.
• (JP) Japan May Household Spending M/M: -2.1% v +0.1% prior; Y/Y: 11.6% v 11.1%e.
• (JP) Japan May Labor Cash Earnings Y/Y: 1.9% v 2.1%e; Real Cash Earnings Y/Y: 2.0% v 2.4%e; Overtime Pay +20.7% y/y; Highest increase since 2013 (oldest comparable data).
• (JP) Japan Deputy PM Aso: Japan and the US will need to defend Taiwan together in the event of a major problem - Kyodo.
• (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.7% 30-year JGBs, avg yield 0.6800% v 0.6930% prior, bid to cover: 3.63x v 3.39x prior.

Korea

• Kospi opened +0.1%.
• 005380.KR Temporary halts Brazil Pant due to chip shortages – Yonhap.
• (KR) South Korea Vice Fin Min: To consider normalized eased cap on Bank FX derivatives going forward, Policy normalization may increase FX market uncertainties.

China/Hong Kong

• Hang Seng opened 0.0%; Shanghai Composite opened 0.0%.
• (CN) China President Xi spoke with France President Macron and German Chancellor Merkel Monday, saying China was willing to convene the 23rd China-EU leaders’ meeting with the EU at an early date, conduct high-level dialogues in strategic, trade, digital and climate sectors - Xinhua.
• 700.HK Chinese regulator reportedly to block Tencent's Video gaming unit merger of Huya and DouYu – press.
• (CN) China PBoC said to call for more credit supply for small and medium size companies (SMEs).
• 9868.HK Confirms pricing at HK$165/shr v guidance of max price of HK$180/shr, IPO 4.7x covered.
• (CN) China PBOC sets Yuan reference rate: 6.4613 v 6.4695 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net drain CNY20B v Net drain CNY20B prior.
• (CN) China PBOC Q2 Survey: Business Climate Index (BCI): 59.6% v 56.6% prior (yesterday after the close).
• (HK) Hong Kong Jun PMI (Whole Economy): 51.4 v 52.5 prior (5th consecutive expansion).
• (HK) Hong Kong Chief Exec Lam: Proposed changes to privacy law only targets 'illegal doxxing' behavior; if any online platforms are concerned about privacy law, Govt officials will be happy to meet with them.
• (HK) Hong Kong Exchange: Expects to launch T+2 IPO settlement cycle during Q4 2022, which will help speed up IPO process.

Other

• OPEC+ will continue quotas at current levels, today's meeting was postponed.
• (PH) Philippines Central Bank (BSP) Gov Diokno: CPI could remain above 2.0-4.0% target during the near term; Non Monetary measures crucial to easy supply pressures.

North America

• WBT Ali Group Submits raised binding All-Cash Proposal at $24/shr (prior $23).
• PFE Israel finding that the COVID vaccine efficacy is more like 64% (prior seen at 96%), so some talk a booster may be needed - press.

Europe

• VOW3.DE Porsche and Rimac Automobili finalize plans to establish JV that will include Bugatti, To be called Bugatti Rimac.

Levels as of 01:15ET

• Hang Seng -0.5%; Shanghai Composite -0.4%; Kospi +0.4%; Nikkei225 +0.3%; ASX 200 -0.3%.
• Equity Futures: S&P500 0.0%; Nasdaq100 -0.2%, Dax +0.0%; FTSE100 -0.1%.
• EUR 1.877-1.1858; JPY 110.98-110.80; AUD 0.7571-0.7528; NZD 0.7094-0.7018.
• Commodity Futures: Gold +1.1% at $1802,/oz; Crude Oil +2.1% at $76.76/brl; Copper +0.7% at $4.37/lb.

Daily Pivots: (S1) 1.1849; (P) 1.1865; (R1) 1.1878; More...

Intraday bias in EUR/USD remains neutral for the moment. . Further fall is still in favor as long as 1.1974 resistance holds. Break of 1.1806 will resume the decline from 1.2265, as the third leg of the consolidation pattern from 1.2348, to 1.1703 support. On the upside, break of 1.1973 resistance will turn bias back to the upside for 1.2265 resistance.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

Daily Pivots: (S1) 1.3822; (P) 1.3842; (R1) 1.3866; More....

GBP/USD's rebound from 1.3730 extends higher today but stays well below 1.4000 resistance. Intraday bias remains neutral first. On the upside, break of 1.4000 resistance will argue that fall from 1.4248 has completed. Intraday bias will be turned back to the upside for retesting 1.4240/8 resistance zone. On the downside, break of 1.3730 support will resume the fall from 1.4248, as the third leg of the consolidation pattern from 1.4240, to 1.3668 support and possibly below.

In the bigger picture, as long as 1.3482 resistance turned support holds, up trend from 1.1409 should still continue. Decisive break of 1.4376 resistance will carry larger bullish implications and target 38.2% retracement of 2.1161 (2007 high) to 1.1409 (2020 low) at 1.5134. However, firm break of 1.3482 support will argue that the rise from 1.1409 has completed and bring deeper fall to 1.2675 support and below.

Daily Pivots: (S1) 0.9208; (P) 0.9220; (R1) 0.9237; More....

Intraday bias in USD/CHF remains neutral for the moment. Another rise could still be seen as long as 0.9141 support holds. Break of 0.9273 would pave the way to 0.9471 key resistance next. On the downside, however, break of 0.9141 support will argue that the rebound from 0.8925 has completed, and turn bias back to the downside for this low.

In the bigger picture, medium term outlook is currently neutral with focus on 0.9471 resistance. Sustained break there will indicate completion of whole decline from 1.0342 (2016 high). Medium term outlook will be turned bullish for a test on 1.0342 high. But, rejection by 0.9471 again will revive bearishness for another fall through 0.8756 low.

Daily Pivots: (S1) 110.79; (P) 110.99; (R1) 111.18; More...

Intraday bias in USD/JPY stays neutral as range trading continues. Another rise would remain mildly in favor with 110.41 support intact. On the upside, sustained break of 111.71 will carry larger implication. Next target is 61.8% projection of 102.58 to 110.95 from 107.47 at 112.64. However, break of 110.41 will indicate short term topping and bring pull back 55 day EMA (now at 109.74).

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. Though, as notable support was seen from 55 day EMA, rise from 102.58 is mildly in favor to extend higher. Decisive break of 111.71/112.22 resistance will suggest medium term bullish reversal. Rise from 101.18 could then target 118.65 resistance (Dec 2016) and above. However, sustained break of 55 day EMA would revive some medium term bearishness, and open up deep fall to 61.8% retracement of 102.58 to 110.95 at 105.77 and below.